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Aluminum Companies Reject Tax Evasion Claims

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Aluminum Companies Reject Tax Evasion Claims

Samál, the Icelandic Association of Aluminum Producers (IAAP), issued a statement today rejecting claims made on RÚV’s news magazine Kastljós that they avoid, albeit through legal means, paying income tax in Iceland.

Photo: Páll Stefánsson/Iceland Review.

In the statement, Samál iterated that the aluminum companies operate in compliance with the Icelandic laws and regulations and investment contracts that they’ve made with the Icelandic state, mbl.is reports.

Samál rejects the coverage on Kastljós on Wednesday and Thursday where it was insinuated that the aluminum companies took advantage of the tax legislation.

On Kastljós it was maintained that Alcoa in Iceland had never paid income tax and that Norðurál (Century Aluminum) had avoided some of the taxes the company should have paid.

As reported on ruv.is, they owe their associate companies abroad hundreds of billions of ISK and pay hundreds of millions of ISK in interest on those loans. The cost is subtracted from their revenue and hence the income tax.

While legislation to prevent such practices is widely in place abroad, it does not exist in Iceland and, on top of that, the agreements made with the companies when they launched their operations in Iceland gave them immunity from future tax legislation.

The statement from Samál pointed out that Alcoa is a young company in Iceland which has yet to fully finance its development in the country but even so paid income tax in advance in 2010-2012 in accordance with an agreement with the Icelandic government.

However, MP Björn Valur Gíslason of the Left-Green Movement stated that the amount contributed to the state treasury by the aluminum companies was not income tax but rather a loan.

When the companies start paying income tax, the loan payments will be balanced out, he reasoned.

Samál also stated that Norðurál has been among the highest payers of public tariffs in Iceland in the past years of which income tax was ISK 1.5 billion (USD 12 million, EUR 9 million).

An article on Samál’s website reads that the aluminum industry contributes ISK 90 billion (USD 750 million, EUR 580 million) to the Icelandic economy annually, as recently concluded in a report by the Institute of Economic Studies at the University of Iceland.